EU investment plan could create 2.1 mln jobs if done right -ILO

GENEVA, Jan 28 (Reuters) - The European Commission's 315
billion euro investment plan to spur growth could create more
than 2.1 million net new jobs, lowering the bloc's jobless rate
by 1 percent by 2018, the International Labour Organization
(ILO) said on Wednesday.

But if the three-year plan, announced by Commission chief
Jean-Claude Juncker in November, fails to attract and leverage
private investment, it would create just 400,000 new jobs,
barely making a dent in the EU's 23 million unemployed, it said.

"If the plan is well designed, by contrast, the number could
reach 2.1 million new jobs by 2018. This would enable a
reduction in the unemployment in the European Union by 0.9
percent point, almost 1 percent lower unemployment rate by 2018.
It's a significant number," Raymond Torres, director of the
ILO's research department, told a news briefing.

"The Juncker plan is potentially an important way to
stimulate the real economy directly in complement to the
monetary injections that have been announced by the European
Central Bank," he added, referring to the massive bond-buying
programme announced last week.

But investors being asked to stump up most of the cash have
said Europe needs to come up with more government money and more
details if its grand plan to boost growth via new infrastructure
projects is to get off the ground.

The plan of loans for infrastructure and small business is
meant to include 252 billion euros in private investment to help
bring down current EU-wide employment of some 10 percent, the
ILO said.

"Therefore it is very important to involve projects with
large economies of scale, for example energy networks in Europe
or green investments, which have a large externality and would
not be carried out normally by private investors alone," Torres
said.

In EU countries with high unemployment rates such Greece,
Spain and Italy, many small businesses currently lack proper
access to bank credit, he said.

"So it's very important that the plan includes a strong
component of involvement of small enterprises through, for
example, credit guarantees, so that full leveraging of funds is
done," he said.

Distribution is key, and funds should not be diverted away
from countries and sectors that are most in need, the ILO said.

The European Investment Bank has invested more in Austria, a
low unemployment country, than in Portugal, Torres said, and it
has also invested much more outside the EU than in Greece.

"So we hope that in the final plan that will be adopted
there will be more consideration to the country allocation of
the funds, and in particular that high unemployment countries
would receive more," he added.
(Reporting by Stephanie Nebehay; Editing by Catherine Evans)